InsiderOnline Blog: July 2009

“Cash for Clunkers,”—the program that rewards people for trading in their gas guzzlers for newer, more fuel-efficient vehicles—is running out of cash after only a few days in operation. The program, originally funded at $1 billion was supposed to last until November 1. This news makes us wonder: Has the government ever seriously underestimated the cost of a government program before? Why yes! In a recent bulletin for the Cato Institute, Michael Tanner and Chris Edwards write:

When Medicare was launched in 1965, Part A was projected to cost $9 billion by 1990, but ended up costing $67 billion. When Medicaid’s special hospitals subsidy was added in 1987, it was supposed to cost $100 million annually, but it already cost $11 billion by 1992. When Medicare’s home care benefit was added in 1988, it was projected to cost $4 billion in 1993, but ended up costing $10 billion.

The Congressional Budget Office and the White House have been tussling over the cost of health care reform legislation; but if history is any guide, they’re probably both underestimating the costs.

Rep. John Conyers (D-Mich.) thinks it’s unrealistic and unproductive to expect members of Congress to read through 1,000-plus-page bills that reform the health care system. It’s hard to blame him. Who wants to slog through all that?

Fortunately, the National Taxpayers Union has found a good shortcut for understanding what the bill is all about. Analyzing the frequency of certain words in the House health care reform bill, NTU found that words relating to competition and consumer choice are hardly present at all compared to words indicating government limitations. Here’s the breakdown of what NTU found:

NTU also analyzed two of President Obama’s recent speeches on health care (one to the American Medical Association and one at a townhall meeting in Green Bay). Funny thing: They don’t seem to reflect the House bill. The President used some variation of the word “require” four times, “tax” twice, “prohibit” once, and “limit” once. The word “option,” however, shows up 19 times. And the words “choice,” “rights,” “marketplace,” and “competition” appear nine times in the two speeches. Seems the President is hoping that lots of people adopt Rep. Conyers strategy of not reading the bill.

Under President Obama’s budget, U.S. defense spending will fall below the pre-9/11 levels. Please visit 4% for Freedom and consider signing the following petition:

We, the undersigned, call on the President and Congress to protect America by:• restoring missile defense funding,• giving our troops the equipment they need to complete their missions, and• not including war funding, maintain a minimum defense budget of 4% of GDP.

In spite of the fact that the United States does not regulate greenhouse gases, it has lower emissions growth than other regions of the world, as Drew Thornley notes at The American:

According to the U.S. Energy Information Administration (EIA), carbon-dioxide emissions from the combustion of fossil fuels increased 0.7 percent in the United States from 2000 to 2006, far below the worldwide increase of 21.6 percent. During the same period, emissions grew 4.9 percent in Europe, 37.6 percent in the Middle East, and 52.3 percent in Asia. Major developing nations saw big increases. India, Malaysia, and China’s emissions increased 27.7 percent, 45.8 percent, and 103 percent, respectively.

Losing sleep over the 2009 federal budget deficit of $1.8 trillion? Then think about this fact instead: Before the 2009 fiscal year even began, to be able to cover all of the accumulated federal debts and liabilities as well as the unfunded obligations for entitlement programs, we (U.S. taxpayers) would have needed to have $59 trillion in an account earning 3 percent real annual interest. That works out to $508,000 per household.

Again, that’s before this year’s record federal deficit goes on the books. Hope that takes your mind off of this year’s record federal deficit.

In 2009, the federal government will spend $33,932 per household. That’s up from $20,848 (in 2009 dollars) in 2001. The budget deficit for 2009 is projected to ring in at $1.8 trillion, which will be 13.1 percent of U.S. gross domestic product—more than double the previous postwar record of 6.0 percent of GDP in 1983.

The temporary stimulus spending that was passed in response to the recession accounts for a large chunk of the increase for 2009. But while projections show federal spending declining sharply in 2010, they also show it taking off again after that. Under President Obama’s 10-year budget plans, federal spending per household will again top $33,000 (in 2009 dollars) per household by 2019.

Under current budget plans, annual federal deficits from 2009 to 2019 would accumulate to $84,352 per household. The public debt will reach 82 percent of GDP by 2019, double its current level of 41 percent of GDP.

But these dire projections are not set in stone. Before the current recession, the federal government spent $25,000 per household. Returning to that level (adjusted for inflation) would likely balance the budget by 2019without any tax hikes.

If federal spending were returned to its 1980-2000 inflation-adjusted average of $21,000 per household, a balanced budget could be achieved as early as 2012 without new taxes.

Eighty-nine percent of climate monitoring stations in the United States fail the National Weather Service’s own siting requirements for ensuring accurate data, according to a recently completed independent survey of the stations. These stations, officially called the U.S. Historical Climatology Network, provide the raw data that climatologists use to measure warming (or cooling) trends in the United States. The U.S. stations are considered to be the most reliable part of the worldwide network of weather stations that monitor global temperatures.

But the survey found that readings at many U.S. climate stations are being influenced by nearby sources of artificial heat or reflective/radiative surfaces. These heat sources include air conditioning exhaust, asphalt parking lots, wastewater treatment plants, electrical substations, airports, and fire and ranger stations. The survey also found that newer thermometers, which have been installed gradually since the early 1980s, have typically been sited closer to buildings and reflective surfaces than the ones they replaced. Thus, the introduction of these newer devices is likely to be responsible for some part of the observed warming trend that has formed the basis for claims that global warming is a significant problem.

The survey was organized and led by meteorologist Anthony Watts, who describes the project in a paper for the Heartland Institute. Over the last several years, about 650 volunteers visually inspected and photographed more than 860 temperature stations—about 70 percent of the total stations of the USHCN. The surveyors found only 3 percent of stations met National Weather Service standards for Class 1 (most reliable) stations. An additional 8 percent of stations met standards for Class 2 stations. Class 1 stations have no artificial heating sources or reflective surfaces within 100 meters, while Class 2 stations are at least 30 meters away from such biasing heat sources. Surveyors found 58 percent of stations to be Class 4, with a margin of error of greater than 2 degrees Celsius, and 11 percent of stations to be Class 5, with a margin of error of greater than 5 C.

Scientists who believe that human activity is and will continue to cause global warming typically cite estimates that global temperatures have increased .7 C over the last century. If Watts’s survey is right, then this warming estimate is well within the margin of error of many U.S. climate stations (which are considered to be the most reliable in the world!). The entire record of Watts’s survey, including photographs, can be found online at www.surfacestations.org. If his survey is right, then climatologists need to get better data.

The Cartel is a new documentary film that should be seen by everyone who cares whether children in this country get a good education. It should especially be seen by anybody who thinks that merely shoveling more money into the schools will make them better.

You’ve probably heard the phrase “Explain it to me like I’m a 5-year-old.” It’s a technique that reporter and filmmaker Bob Bowdon expertly uses here to tell the story of what has gone wrong with American education. And one of the things you learn from The Cartel is that explaining things to 5-year-olds—or 7-year-olds, or 9-year-olds—is a task that too many public schools can’t handle.

Some elements of this story will be familiar: American students get poor test scores compared to their peers from other countries; some high school graduates can’t even do basic math; many school districts can’t account for taxpayer money; violence is commonplace for too many students; very little money actually gets to the classroom; bad teachers can’t be fired; administrators get huge salaries; and school payrolls are bloated with patronage jobs. Bowdon reveals all of this and more, focusing especially on public education in New Jersey.

But he doesn’t stop at just describing the problems. Who, Bowdon asks, is watching the store? In theory school boards run the schools, and the school boards are answerable to the voters. But are they? Have you ever noticed that school board elections are never held the same day as presidential elections? Why is that?

The Cartel reveals the story behind the story of educational failure in the United States: Teachers unions are special interest groups, and, just like any special interest group, the unions exert a disproportionate influence on the public policies that most affect their members. Candidates for school boards must play nice with the unions, if not play the role of outright stooge; if they don’t, they’ll find themselves opposed by a block of very motivated voters. The teachers can thus select the people with whom they must negotiate their contracts; and teachers unions don’t want contracts that reward the best teachers and that allow bad teachers to be fired.

Of course, the politics of schools matter only because public schools have a guaranteed revenue stream no matter how poorly they perform. If instead we had a system where the funding followed the student to the school of his or her choice and entrepreneurs were free to start up alternative schools—call such a system “school choice” for short—then school boards would have no choice but to begin holding teachers accountable, otherwise they would lose all their students.

Bowdon pokes lots of holes in the arguments that teachers unions make against school choice. School choice, teachers say, diverts money from public schools into private schools. But that’s only true, points out Bowdon, if parents choose to use a voucher to go to another school. In other words, the money is only drained if public schools are doing such a poor job that parents want to leave. So when public school supporters make that argument, aren’t they really admitting that public schools aren’t very good? And why is it that so many opponents of school choice make out “voucher” to be such a dirty word while at the same time supporting other staples of progressive public policy such as food stamps, Pell Grants for higher education, Medicare, and Section 8 housing. Those are all voucher programs in which public money is provided for goods and services produced by the private sector!

See The Cartel, and take your kids, too, if you’re worried they’re not getting enough logic and reason in the classroom.

Three Democrats on the House Franking Commission are using their authority to approve franked mail to force GOP members to alter messages to their constituents about health care reform. The commission has also denied the use of franking privileges for mailing a copy of a chart that shows how complicated health care would be under the Democrat’s reform plan. At least 15 GOP members of the House had planned to mail the chart, produced by Republicans on the Joint Economic Committee, to their constituents.

Franking privileges allow members of the House to send mail to their constituents without paying for postage. The costs of franked mail are covered by taxpayers. According to House rules, “comments critical of policy or legislation should not be partisan, politicized or personalized” in franked mail. Rep. Dan Lungren (R-Calif.), one of the three Republicans on the commission, told the Washington Post: “We have never before censored anybody’s presentation of facts this way.” Lungren, reports the Post, “said that Democrats this year have sent out numerous pieces of franked mail touting the number of jobs created by the economic stimulus package, and that while Republicans might disagree with those numbers, they have not moved to block the mail.”

In addition to blocking the mailing of the GOP chart, the Franking Commission has told members they could not use the phrase “government-run health care” to describe the public health insurance option that the Democrats want to create. The Democrats on the commission also told one Republican member that he had to add the phrase “In my opinion,” to the statement “The bill imposes a new payroll tax on employers who do not provide their employees with insurance.” Of course, the bill does in fact impose such a tax; there’s no doubt about it. (For more examples of Franking Commission editing of GOP constituent mail see Connie Hair’s article “Carter & Co. Kick House Censors,” in today’s Human Events.)

It’s too bad for the House GOP that there isn’t some sort of dispersed, just-in-time publishing system that lets them bypass the Franking Commission and the Postal Service altogether to disseminate information such as the GOP chart. Here’s what that looked like, by the way:

Sixty-one percent of people say funding for public education should be increased, but that figure drops to only 51 percent when people are given accurate information about how much is currently being spent. That’s the finding from a survey conducted by William Howell and Martin West. Howell and West, who describe their survey in the Summer 2009 issue of Education Next, also find that accurate information about teacher salaries causes support for higher teacher salaries to drop from 69 percent to 55 percent.

In a different survey from 2007, Howell and Martin asked people to estimate how much money is spent on public education. The average answer was $4,231 per student, and the median response was just $2,000; the actual figure at the time exceeded $10,000. The same survey also found that people underestimated teacher salaries by almost a third. Interestingly, teachers themselves also underestimated average teacher salaries by 20 percent.

Another interesting finding from the 2008 survey is that many self-identified liberals are skeptical of charter schools because they think charter schools can charge tuition and can teach religious views. When people are told that is not the case, a plurality of liberals support charter schools. Unfortunately for charter schools, the same information seems to make conservatives less likely to support them.

Sen. Jim DeMint (R-S.C.) has been much in the news lately for saying health care reform could be President Obama’s Waterloo. Liberal commentators have run with the comment, trying to make it seem as if DeMint—and by proxy everyone else who opposes the President’s health care policies—are focused only on petty politics.

But anyone who knows anything about Sen. DeMint’s record knows how inaccurate this charge is. Sen. DeMint has been a consistent and principled advocate of reducing the size of government and giving more liberty to the individual—no matter which party controls the government. He has criticized both Republicans and Democrats for their porkish proclivities. He opposed the Wall Street/corporate bailouts that occurred under both presidents Bush and Obama. He has also been warning for many years about the dangers of too much dependency on government.

And DeMint has been talking about the need to reform health care since before Obama was even a Senator. DeMint’s plan calls for tearing down state barriers that prevent people from buying insurance across state lines. Judging from their arguments for another government-run health insurance plan, liberals seem to agree that we need more competition in health care insurance. Wouldn’t getting government out of the way of competition be easier than adding a trillion plus dollars to the national debt over the next decade?

Now DeMint has a new book called Saving Freedom: We Can Stop the Slide into Socialism. We haven’t read the whole thing just yet, but we can report that the word “Obama” does not appear in the table of contents. Also, among the book’s chapters is a nifty little guide for citizens to get involved in the fight to save freedom.

If you are in the D.C. area this evening, you can catch the Senator talking about his new book at a reception at The Heritage Foundation. The event starts at 5:30 p.m.

This gem of an observation comes from the Georgia Public Policy Foundation’s Friday Facts:

First-quarter handgun sales shot up for Glock Inc., whose U.S. headquarters are in Smyrna, Ga. Glock reported this month that sales had increased a whopping 71 percent. Source: Atlanta Business Chronicle

The House health care bill cuts Medicare spending by about $500 billion over ten years, but only about 1 percent of those cuts are coming from eliminating waste, fraud, and abuse. That means, says Betsey McCaughey Ross, that seniors will be in for a rough time:

The House bill shifts resources from specialty medicine to primary care based on the misconception that Americans overuse specialist care and drive up costs in the process (pp. 660-686). In fact, heart-disease patients treated by generalists instead of specialists are often misdiagnosed and treated incorrectly. They are readmitted to the hospital more frequently, and die sooner.

“Study after study shows that cardiologists adhere to guidelines better than primary care doctors,” according to Jeffrey Moses, a heart specialist at New YorkPresbyterianHospital. Adds Jeffrey Borer, chairman of medicine at SUNYDownstateMedicalCenter: “Seldom do generalists have the knowledge to identify the symptoms of aortic valve disease, even though more than 10% of people over 75 have it. After valve surgery, patients who were too short of breath to walk can resume a normal life into their 80s or 90s.”

While the House bill being pushed by the president reduces access to such cures and specialists, it ensures that seniors are counseled on end-of-life options, including refusing nutrition where state law allows it (pp. 425-446). In Oregon, some cancer patients are being denied care by the state that could extend their lives and instead are afforded the benefit of physician-assisted suicide instead.

The harshest misconception underlying the legislation is that living longer burdens society. Medicare data prove this is untrue. A patient who dies at 67 spends three times as much on health care at the end of life as a patient who lives to 90, according to Dr. Herbert Pardes, CEO of New York Presbyterian Medical Center.

In his press conference last night, President Obama explained how increasing government spending on health care will save money: “If there’s a blue pill and a red pill, and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that’s going to make you well?”

That line prompted this opening in David Freddoso’s Washington Examiner column today:

In last night’s press conference, President Obama seemed to be reliving that famous scene from The Matrix. The main character is offered a choice between a red pill that makes him see reality for what it is, and a blue pill that allows him to continue living in a pleasant world of illusions.

Last night, President Obama appeared to have taken the blue pill before his press conference. How else could he convince himself, the Congressional Budget Office’s numbers notwithstanding, that his health care reform bill will not increase both health care costs and the federal deficit? How else can he continue to make the argument that a massive expansion of government spending on health care will solve rather than exacerbate the current problems? How can he repeatedly express such absolute certainty that such a measure will easily pay for itself several times over in the long run? Why can he not at least acknowledge the possibility that it will become a costly and useless trillion-dollar boondoggle that follows in the footsteps of his stimulus package?

Freddoso’s reference to The Matrix is spot on. But in the category of “nailing the ‘Through the Looking Glass’ quality of the President’s health care ideas with a pop culture metaphor,”we’ll nominate John Goodman for a blog post he wrote a couple days ago. While explaining how the President’s spending plans are all out of proportion to any real health care problem being addressed, Goodman referenced and embedded a video of Jefferson Airplane’s “White Rabbit.” Indeed, when some people think you can control costs in one-sixth of your economy by creating additional constituencies for government spending, what can you do but wonder whether those folks have gotten the call from the hookah-smoking caterpillar? Here’s a great remix version:

RAND researchers looked at how ten important medical innovations likely to emerge in the near future might affect Medicare spending in 2030. These included anti-aging compounds for healthy people, cancer vaccines, tiny defibrillators implanted near the heart, better treatments for stroke and cancer, and Alzheimer’s prevention. Every hypothetical innovation, the researchers found, would increase Medicare spending. Even the cheapest, an anti-aging compound taken by healthy people that would cost just $11,245 per life-year saved, would increase health-care spending by 14 percent in 2030—because there would be 13 million more beneficiaries collecting benefits.

… RAND examined the effects of fighting four risk factors for heart disease. If we could get all the elderly to stop smoking and control their diabetes, their health would improve, of course, but costs would rise, again because those ex-smokers and diabetics would eventually be vulnerable to other health problems. If we effectively treated hypertension and slashed obesity rates by 50 percent, however, health would improve and costs would fall. Reducing obesity produced the clearest gains because obesity, though it sharply increases costs, doesn’t reduce longevity significantly.

In Britain’s nationalized health care system, the National Institute of Clinical Excellence is the agency that decides which treatments patients can have. NICE follows a rule that says it won’t pay for any treatment that costs more than $22,000 to extend a life for six months. As the Wall Street Journal reported recently, that figure has remained relatively constant and the British government does not even adjust it for inflation.

So the question for the United States is whether the push to reform health care will lead to a system that allows new health-improving treatments—which will cost more—or a system that denies those treatments in order to save money, such as the British universal system. One clue on President Obama’s thinking is that he originally nominated Tom Daschle for Secretary of Health and Human Services. Daschle’s book Critical: What We Can Do About the Health-Care Crisis drew inspiration from the NICE model in proposing the creation of a health care Fed. Daschle wrote: “We won’t be able to make a significant dent in health-care spending without getting into the nitty-gritty of which treatments are the most clinically valuable and cost effective. That means taking a harder look at the real costs and benefits of new drugs and procedures.”

The national minimum wage rises Friday to $7.25 per hour. Director of the CBO Douglas Elmendorf recently wrote:

Requiring employers to offer health insurance—or pay a fee if they do not—is likely to reduce employment, although the effect would probably be small. Those who would most likely be affected are currently paid close to or at the minimum wage. They would be more vulnerable to job loss because their wages could not be lowered sufficiently to absorb the cost of health insurance (if their firm decides to offer) or the fee (if their firm does not) without bumping into the minimum wage. [Emphasis added.]

The CBO director believes, in other words, that compensation is more or less fixed according to an employee’s productivity and attempts to raise compensation through mandates will induce employers to trim their payrolls of workers who do not produce enough cover the cost of their employment. The director’s views are backed up by the data. A recent literature review by David Neumarkand William L. Wascher finds that two-thirds of economic studies find a negative employment affect of raising minimum wages. Congress should listen to its CBO Director before putting a health care mandate on employers; it should also have heeded economic logic before raising the minimum wage in the first place. Each mandate compounds the error of the other.

Here is a puzzle: If, as President Obama says, health care reform is so urgent that Congress must pass a bill by August, then why do the plans under consideration not take effect until after 2013? Expanding Medicaid eligibility is a central part of the various health care reform bills under consideration, and that part of the plan, at least, could be accomplished in a matter of months, according to Heritage Foundation fellow Dennis Smith. And Smith should know: He was director of the federal Center for Medicaid and State Operations for seven years. There are problems with Medicaid, but if the Obama administration thinks the program is worthy of expansion, then why make the 11 million potential new beneficiaries wait? “Presumably,” says Smith, “the delay is to avoid another $200-$300 billion in cost.”

Giving 37 million people private health insurance could be accomplished for about half the cost of the massive expansion of government in health care that the House of Representatives is contemplating, calculates Jacob Sullum:

By 2018, the CBO projects, the [House] legislation would provide insurance to 37 million Americans who currently lack it, at a cost of $234 billion. That works out to about $6,300 a person for a year of coverage, which seems pretty pricey, especially since the total cost would be higher: People participating in the insurance exchange would be expected to pay part of their premiums.

According to a December 2007 report from America’s Health Insurance Plans, the average annual premium for nongroup health insurance that year was about $2,600 for individual coverage and $5,800 for family coverage. The Census Bureau reports that three-quarters of uninsured Americans live in family households, which in the general population average three people each. Taking that into account, buying insurance for 37 million people in 2007 should have cost around $78 billion, or a little more than $2,000 each.

How much would it cost in 2018? Kaiser Family Foundation data on employer-provided health benefits (which tend to cost a lot more than policies purchased by individuals) indicate a recent premium growth rate of 5 percent a year, which would make $2,000 in 2007 about $3,400 in 2018, a little more than half what the House bill would spend to insure one person.

There’s something in the House of Representatives plan for health care reform that’s not new at all. The proposal to pay for reform with new taxes on high-earning individuals would continue the decades-long practice of expanding government benefits while leaving only the rich to pay for it.

According to the Tax Foundation, the House of Representatives’ plan to pay for health care reform with new taxes on high-earning taxpayers would leave 39 states with top effective marginal tax rates of greater than 50 percent. Specifically the House plan calls for income surtaxes of 1 percent on adjusted-gross income of between $350,000 and $500,000; 1.5 percent on AGI between $500,000 and $1 million; and 5.4 percent on AGI over $1 million.

In 2006, the top 1 percent of taxpayers paid 40 percent of all federal income taxes; 30 years ago, that figure was less then 20 percent. As an interactive chart from The Heritage Foundation shows, almost no other income group—including even very high earners falling just outside the top 5 percent—has experienced anything like such an increase in share of tax burden.

Heritage analysts Curtis Dubay and Brian Riedl point out that this surtax, combined with President Obama’s proposal to increase the top marginal rate to 39.6 percent, would leave the United States with an average top rate of 52 percent, higher than the top rates in all of the OECD countries except Denmark, Sweden, and Belgium. And that’s just for starters, as the House bill also provides for additional surtaxes if the reform does not produce the savings claimed.

One more point: Many small businesses pay taxes at the individual rate, which means that this plan will hurt the ability of U.S. small businesses to compete and create new jobs.

The 40th anniversary of the moon landing is coming up, a fact being noted by many commentators, including Don Boudreaux:

[A]chievements even more wondrous and glorious than moon shots surround us daily – for example, New York City is fed day in, day out, without fail. Millions of people from around the world work to grow, process, warehouse, deliver, cook, and serve food so that eight million New Yorkers eat well each day. No one plans this wondrous achievement, and no one is forced to contribute toward its realization. It’s the happy result of hundreds of millions of persons peacefully pursuing their own self-interests within markets.

Is a moon shot really as wondrous as the intricate coordination of the plans and actions of these countless suppliers and consumers? Is putting a human being on the moon really as glorious as the fact that hunger has been all but eliminated everywhere that markets operate?

The main takeaway from the Sotomayor confirmation hearings, as both Conn Carroll at The Foundry and James Copland at Bench Memos have pointed out, is that the conservative position on judges—that judges should not substitute their own policy preferences for what the law and the Constitution say—is now the mainstream position to which even liberals must pay lip service.

Here are some of Sonia Sotomayor’s greatest hits from the hearings:

• “The Constitution is a document that is immutable to the sense that it’s lasted 200 years. The Constitution has not changed except by amendment. It is a process, an amendment process that is set forth in the document. It doesn’t live other than to be timeless by the expression of what it says.”

• “[T]he role of the court is never to make the policy. It’s to wait until Congress acts.”

• “I have actually agreed with Justice Scalia and Thomas on the point that one has to be very cautious even in using foreign law with respect to the things American law permits you to. And that’s in treaty interpretation or in conflicts of law because it’s a different system of law.”

• Asked whether she agreed with President Obama’s statement that the law provides the answer in 95 percent of cases and a judge’s heart provides the answer in the other 5 percent, Sotomayor replied: “I wouldn’t approach the issue of judging in the way the president does. He has to explain what he meant by judging. I can only explain what I think judges should do, which is judges can’t rely on what’s in their heart. They don’t determine the law. Congress makes the laws. The job of a judge is to apply the law. And so it’s not the heart that compels conclusions in cases. It’s the law. The judge applies the law to the facts before that judge.”

Time will tell whether she meant what she said. In the meantime, Copland has a suggestion: “It’s hard for me to see why Sotomayor’s statements couldn’t be used pretty powerfully to undercut the legitimacy of a full-blown transnationalist like Harold Koh, or anyone firmly rooted in the Critical Legal Studies school.”

A chart posted yesterday by Andrew Biggs at AEI’s Enterprise Blog is helpful for sorting out arguments about health care costs:

There is little third-party payment for veterinary services and yet expenditures for veterinary services grow at much the same rate as health-care expenditures for humans. So does this chart demonstrate, as Megan McArdle suggests, that reforms focusing on making consumers more sensitive to prices won’t have an impact on expenditures?

In brief, Biggs’ argument is that it is the level, not the growth rate, of health care spending about which we should be concerned. Health care spending—for both humans and pets—rises over time because we find more and more value in new health care technologies and because our rising incomes allow us to afford them. But even if the growth rate of health care spending is not a problem, the level of spending could be a problem if we are spending on things that do not provide value. That’s what we would expect in a health care system such as we have now where the consumer does not bear the full cost of his consumption.

This argument sounds right, and if it is, then President Obama and liberals in Congress have entirely the wrong definition of the health care problem. Merely “bending the spending curve downward” won’t address wasteful spending and may well force us to forgo spending on health care that would be worth having. On the other hand, reforms that focus on putting the consumer in charge, instead of government, would create the incentives needed to make sure every health care dollar we spend buys us at least a dollar in health care value.

OpenRegs.com is a sharp-looking new Web portal that aims to make it easy for users to keep track of new and proposed federal regulations.

The site lets viewers browse regulations by agency or topic, find out when comment periods begin and end, submit comments directly to federal agencies, and engage in discussions with other users. Every regulation has its own page which includes the full federal register notice. Users can also subscribe to alerts by agency and by topic.

The Congressional Budget Office says health information technology, administrative simplification, and comparative effectiveness research will not produce the health care savings that liberals want in order to fund the expansions of coverage in their reform plans. Another potential confounding factor, says The Heritage Foundation’s David Kreutzer, is the reality that hospitals, ambulances, MRI machines, medical equipment manufacturers, and so forth all use energy. Why does that matter? It matters, because the Waxman-Markey global warming bill seeks to cut carbon dioxide emissions by raising energy prices. According to Kreutzer’s calculations, if Waxman-Markey became law, it would add 11.6 percent to the cost of health care by the year 2035.

It’s certainly true that the US spends more of its GDP on health care than other countries, there can be no doubt about that. But why not look at this through the other end of the telescope? What if it’s the US that is spending the correct amount of national income on health care and everyone else who is wrong, everyone else that is the piker? …

[A]s income changes we spend different proportions of those incomes on different things. Subsistence farmers spend almost nothing on entertainment as they are too busy ensuring they subsist. As incomes rise we quite naturally spend more on leisure, education, clothing, housing and making idiotic TV shows. It isn’t just amounts that change, but proportions: food now takes some 10% of the weekly budget as opposed to multiples of that only a few decades ago.

Now, how would we decide what is the “correct” portion of these rising incomes which should be spent on any particular sector? The best way to find out what the individuals whose income it is think about it is to have a free market in it. Let the people choose as it were. … If this is true then it’s the US that has the better system, not us in Europe who deliberately cram down the amount spent on health care as a percentage of national income. We’re deliberately denying the will of the people in over riding their wishes and insisting that the Man in Whitehall knows best.

If single-payer health care can protect citizens from suffering a medically induced personal bankruptcy, you wouldn’t know it by comparing the U.S. experience with that of Canada.

According to a recent study by David Himmelstein, Deborah Thorne, Elizabeth Warren, and Steffie Woolhandler, uninsured medical expenses “caused” 62.1 percent of all non-business personal bankruptcies in the United States in 2007. The study authors think this finding—which has been questioned by other researchers—helps make the case for single-payer health care.

But if single-payer is the answer, then why doesn’t Canada have a lower rate of personal bankruptcies than does the United States? As Fraser Institute analysts Brett Skinner and Mark Rovere point out, Canada and the United States had similar rates of personal bankruptcy in 2007: .3 percent for Canada and .27 percent for the United States; and in 2006 Canada had a markedly higher rate (.3 percent) than did the United States (.2 percent).

As Skinner and Rovere point out, Canada and the United States are similar in many respects on health care policy—with the major exception that Canada has single-payer financing and the United States has a mix of public and private financing. It seems, then, that single-payer financing does not make the difference that Himmelstein, et al., think it does.

A thorny question about the Honduras situation is: If President Zelaya had committed depredations against the Honduran constitution, then why did the military shuttle him out of the country instead of arresting him for trial?

Mary Anastasia O’Grady points out in her Wall Street Journal column that Honduran legislators had reason to fear that Zelaya’s supporters would respond to his arrest with violence if Zelaya remained in the country. It would not have been the first time, O’Grady notes, that Zelaya has used street mobs to threaten violence against the other institutions of Honduran democracy:

The first [instance] occurred in January when the country was preparing to name a new 15-seat Supreme Court, as it does every seven years. An independent board made up of members of civil society had nominated 45 candidates. From that list, Congress was to choose the new judges.

Mr. Zelaya had his own nominees in mind, including the wife of a minister, and their names were not on the list. So he set about to pressure the legislature. On the day of the vote he militarized the area around the Congress and press reports say a group of the president’s men, including the minister of defense, went to the Congress uninvited to turn up the heat. The head of the legislature had to call security to have the defense minister removed.

In the end Congress held its ground and Mr. Zelaya retreated. But the message had been sent: The president was willing to use force against other institutions.

In May there was an equally scary threat to peace issued by the Zelaya camp as the president illegally pushed for a plebiscite on rewriting the constitution. Since the executive branch is not permitted to call for such a vote, the attorney general had announced that he intended to enforce the law against Mr. Zelaya.

A week later some 100 agitators, wielding machetes, descended on the attorney general’s office. “We have come to defend this country’s second founding,” the group’s leader reportedly said. “If we are denied it, we will resort to national insurrection.”

These and other facts running counter to the coup narrative call for President Obama and Secretary of State Clinton to make their own assessment of the situation, rather than blindly following the lead of the Chavez acolytes at the Organization of American States.

Only 3.5 percent of students in Arizona public schools are able to pass the civics test that the United States Citizenship and Immigration Services gives to candidates for U.S. citizenship, according to a survey conducted by Strategic Vision LLC for the Goldwater Institute. Those taking the test to become citizens pass at a rate of 92.4 percent. High school students attending charter or private schools performed markedly better than those in public school, though they still passed at disappointingly low rates: Only 7.3 percent of charter school students passed the test, while 13.8 percent of private school students passed the test.

The group Let Freedom Ring has a good idea: Members of Congress should read the bills they vote on, especially those that plan vast reorganizations of the economy.

As the Washington Examiner’s David Freddoso reported back on June 26, when the House voted and passed its cap-and-trade global warming bill, there existed no complete copy of the bill that any member could have read. The closest thing members had to a complete copy of the bill was a 1,090-page copy sitting at the House clerk’s desk side-by-side with 300 pages of changes that had been added only hours before. The changes, unintegrated into the body of the bill, consisted of sentences such as “Page 15, beginning line 8, strike paragraph (11) …” In other words, the changes were incomprehensible on their own.

Let Freedom Ring wants to make sure such negligent voting doesn’t happen again with health care reform. The group is urging members of Congress to sign a pledge that they will not vote for any health care reform bill they have not read completely and which has not been posted online in its entirety for 72 hours before the vote. The group plans to post a list of members who have signed the pledge on July 20.

As of late, when it comes to policymaking in WashingtonD.C., the trendy thing to do has been to point to Europe.Our Members of Congress are doing it with two of the largest reform policies currently on the table: health care and energy.With regards to energy, advocates of a cap and trade program to reduce carbon dioxide emissions say if Europe can do it, so can we. But the reality is we’re lucky Europe’s gone through with a cap and trade program because it is a perfect example of what not to do.

“Most western European nations are currently learning, the hard way, that ratcheting down carbon emissions [through cap-and-trade] is very difficult and expensive…To the limited extent European nations have reduced emissions below business-as-usual levels, it has hurt their economies. Almost every western European nation has had higher unemployment and energy costs than America, and a weaker overall economy, even as emissions were rising. Far from seeing evidence of the new green economy some are now promising, we are seeing that cap and trade has contributed to the harm. For example, Spain has been cited repeatedly as the example of a successful clean energy economy and source of green jobs, but it is rarely mention that Spain currently has 18 percent unemployment.”

Heritage analysis of the Waxman-Markey legislation that recently passed the House predicts costs averaging nearly $3,000 annually for a family of four, overall lost gross domestic product of $393 billion annually and $9.4 trillion cumulatively by 2035, as well as over a million lost jobs. Even the Washington Post describedEurope’s emissions trading scheme (ETS) as “exhibit A” in what not to do.

Cap and trade supporters can make excuses all they want for ETS’ poor record in Europe. But the bottom line is pretty clear, Lieberman said:

“The record in Europe suggests that the Heritage Foundation and others predicting high costs for Waxman-Markey are right, while those predicting postage stamp per day costs are wrong. If it really were postage stamp cheap, Europe’s emissions reduction record would be much better, and there would be no need to make excuses for it.”

With the Waxman-Markey cap and trade bill passing the House on June 26th, we turn our attention to the Senate side of the debate. And it’s already starting:

Cabinet officials pressed President Barack Obama's case for climate-change and clean-energy legislation at a Senate hearing on Tuesday as lawmakers clashed over whether a "cap-and-trade" system for cutting greenhouse gases would help the U.S. economy or hurt it.

"Denial of the climate-change problem will not change our destiny a comprehensive energy and climate bill that caps and then reduces carbon emissions will," said Energy Secretary Steven Chu in remarks before the Senate Environment and Public Works Committee.

Mr. Chu and the secretaries of agriculture and interior joined the chief of the Environmental Protection Agency in making Mr. Obama's case to generally supportive Democrats and skeptical Republicans.

Sen. James Inhofe of Oklahoma, the panel's top Republican, said the cap-and-trade system would amount to the largest tax increase in American history, a statement echoed by many Republicans but shot down by Democrats including Sen. Barbara Boxer of California, who chairs the committee.

"There are no new taxes," Ms. Boxer said Tuesday morning.”

No new taxes?What do you call the estimated $5.7 trillion from 2012-2035(Brooking estimates $9 trillion from 2012-2050) of revenue the government expects to collect from this bill?That’s right, they call it climate revenue.

Moreover, it should be a red flag when the Environmental Protection Agency (EPA) admits cap and trade won’t work.At yesterday’s hearing before the Senate Environment Public Works Committee,

“EPA Administrator Jackson confirmed an EPA analysis showing that unilateral U.S. action to reduce greenhouse gas emissions would have no effect on climate.Moreover, when presented with an EPA chart depicting that outcome, Energy Secretary Steven Chu said he disagreed with EPA's analysis.

"I believe the central parts of the [EPA] chart are that U.S. action alone will not impact world CO2 levels," Administrator Jackson said.

Sen. James Inhofe (R-Okla.) presented the chart to both Jackson and Secretary Chu, which shows that meaningful emissions reductions cannot occur without aggressive action by China, India, and other developing countries."I am encouraged that Administrator Jackson agrees that unilateral action by the U.S. will be all cost for no climate gain," Sen. Inhofe said. "With China and India recently issuing statements of defiant opposition to mandatory emissions controls, acting alone through the job-killing Waxman-Markey bill would impose severe economic burdens on American consumers, businesses, and families, all without any impact on climate."

Getting China and India on board with a carbon reduction plan is highly unlikely.Even then, a multilateral approach does not guarantee a successful system or the ultimate goal of global temperature reduction.Take a look at Europe:

“Cap-and-trade regimes have advantages, notably the ability to set a limit on emissions and to integrate with other countries. But they are complex and vulnerable to lobbying and special pleading, and they do not guarantee success.

The experience of the European Union is Exhibit A. Emissions targets were set too high. Too many pollution allowances were given away to industry. The value of a carbon credit plummeted. Companies made windfall profits by charging customers more for energy while selling allowances they didn't need. And the Europeans have not had much success reducing greenhouse gas emissions. Disputes on the next round of reductions led to the creation of a two-tiered system to appease Eastern European countries fearful of the cost to their industries.”

Jaczko’s talk was encouraging for its discussion of the need to enhance agency decisiveness and regulatory preparedness for dealing with new challenges, such as waste management and other fuel-cycle related activities. Both will be key factors in any future nuclear renaissance. Jaczko explained:

“Decisiveness means the ability to come to resolution in a predictable manner after open and informed debate. To be decisive, we must understand the public interest and as much of a complicated issue as possible so we can make a policy decision that ensures public health and safety…The public demands that from a regulator. The licensees should expect that from a regulator.”

While we’d like to see a streamlined process, the Chairman’s remarks demonstrate his commitment to efficiently carry out the Commission’s current responsibilities:

“Decisiveness will also be important as the NRC continues to review applications for new power reactors, fuel cycle facilities and uranium recovery facilities. With a strong foundation, good communication, and a decisive ability to move forward, I believe we will be well positioned to address the challenges posed by the new licensing work.

As Chairman, I intend to keep the staff’s focus on safety and security with clear guidance and expectations for their review and to keep the applicants focused on high quality applications. Applicants should provide complete applications and they should prioritize those facilities that they intend to build in the near future…

There are also areas where we are not quite as certain we will see activity, but where advanced planning, at least at a basic level, should be explored. For instance, we should transparently communicate licensing requirements for the review of potential reprocessing or recycling applications. The agency will need to develop its regulatory infrastructure to be able to effectively complete such reviews, and we should be communicating with all of our stakeholders now to determine the appropriate timeframe for such a resource intensive effort. This, in turn, allows us to provide more predictability to the applicants as a whole, better resource planning for our staff, and ultimately more public confidence for those on whose behalf we regulate.”

This theme of regulatory preparedness is important, since any nuclear revival will depend on the NRC’s capacity to adapt quickly to the expanded regulatory responsibilities that are sure to accompany any serious growth in the nuclear industry.

An important element of the Jaczko lecture was that he portrayed himself as a fair regulator. Ultimately, that is all we can ask for of a government regulator; it is simply not the place of the regulator to advocate or oppose that which they regulate. They should be dispassionate parties that carry out their duties to protect public health and safety in a fair and efficient manner.

Advocacy or opposition of commercial activities by public figures is inappropriate. It too often leads to corruption, special interest politics, and fewer choices and higher prices for consumers.

Would we have liked to see the chairman stand before the crowd and talk about how he was a sharpened knife ready to have at the notorious red tape at the NRC? Absolutely.

But short of that, he did the next best thing. In a nutshell, he said that he’s a regulator and that he would ensure that the public’s health and safety will be protected and that he would carry out his duties in a transparent and efficient manner.

Despite our visceral dislike of regulators and unnecessary regulation, at least when it comes to nuclear energy, we recognize that regulation has its place. And while no one knows for sure what Dr. Jaczko’s tenure as NRC Chair has in store, he’s off to a fine start.

“There’s a point at which you’ve got to ask yourself, what are we doing here? What’s the point?”

That’s Elaine Kamarck, a former Clinton administration official and advisor to at that time Vice President Gore and she’s talking about the Waxman-Markey cap and trade bill. In order to garner enough votes to pass the House of Representatives, policymakers made promises that have groups like Greenpeace questioning the environmental effectiveness of the bill.

One of the most contentious provisions in the bill is the use of offsets to reduce carbon dioxide emissions, in which, “a manufacturing plant in, say, Gary, Ind., that is exceeding its “permitted” expulsion of CO2, could continue to commit this sin against humanity by paying for a Brazilian farmer to plant some trees in the rain forest. A more patriotic company might achieve the same result by paying an Iowa former to implement more “Earth-friendly” farming practices. Of course, to guard against some nefarious polluter trying to cheat Uncle Sam and the world by claiming bogus “offsets,” there must be a monitoring mechanism. Enter the “Offsets Integrity Advisory Board”—yet another group of scientific “experts” that would be tasked with compiling a list of qualifying offsets around the globe.”

Cap and trade is a regulatory nightmare that would hand over more power and money to the government with the intention of reducing global temperatures. The problem with that, however, is the Waxman-Markey cap and trade bill will only reduce temperatures by an amount almost too small to measure. The bigger problem is consumers’ pocketbooks will be hit hard by this bill. The Heritage Foundation’s Center for Data Analysis found that by 2035, gasoline prices would increase 58 percent, natural gas prices would increase 55 percent, home heating oil would increase 56 percent, and worst of all, electricity prices would jump 90 percent. After all, the goal of cap and trade is to drive up energy prices so high that people will use less. Yet in Missouri, state legislators are considering a bill that would charge consumers for saving electricity.

The lingering question is: How on earth did this bill pass? Through the back door: “At a time when some still saw Obama as too inexperienced to adapt to Washington’s backroom ways, Waxman found the president perfectly ready to accept the only strategy that offered hope of success: Sitting down with each group affected by the bill and trading concessions for support.”

Yet many of the same companies that hired lobbyists to help shape the 1,200-page bill and will receive handouts in the short-term will inevitably face significant amount of economic pain in subsequent years from drastically higher energy prices. They will have to shed jobs or ship them overseas.

As the climate change debate moves to the Senate, it’s important to remember Elaine Karmarck’s two questions. What are we doing here? What’s the point?

Blogging by our regular contributor, Alex Adrianson, will be sporadic as he is on vacation this week. Filling in with an occasional post will be Nick Loris from The Heritage Foundation’s Thomas A. Roe Institute for Economic Policy Studies. Nick will be doing what members of the House should have done but didn’t: reading the Waxman-Markey global warming bill to see what’s in it. (We wonder if there is any pork in there.) He’ll report what he finds there as well as on developments on global warming legislation in the Senate.

Connecting with other people who care about liberty in America is a great way to spend July 4. To find a Tea Party event near you, check out the extensive schedule at The Tea Party and Revolution Web site.

Courtesy of Michael Quinn Sullivan of Empower Texans, here is a reminder that the work of liberty awaits us on July 5 and thereafter:

Each Independence Day I think of my ancestor Benjamin Rush, a signer of the Declaration of Independence. Two centuries and numerous generations later, I take much inspiration from what he and his colleagues committed to in the summer of 1776.

Just imagine how different the world would be had they not approached independence with a passionate commitment to liberty!

But what if on Friday, July 5, 1776, the men who approved the Declaration of Independence merely headed home believing their work done? Sure, they declared the equality of men, extolling the inalienable rights to life and liberty. It must have felt good to vent frustrations about the king. What if each man decided the talk of freedom shouldn’t inconvenience anyone too much?

Alas, there would have been no “new nation, conceived in liberty.” Rather than Old Glory, our public spaces would today be festooned with the Union Jack – or worse. The world would be a darker place.

As a legal document only the president of the Congress – John Hancock – probably had to sign the Declaration, but the others did as well. Benjamin Franklin reportedly said to Hancock, “We must all hang together, or assuredly we shall all hang separately.”

Indeed, they saw the fight for political liberty as inextricably linked to providing for their families, serving in their churches, and ensuring the long-term prosperity of their neighbors.

They didn’t know if they would be hung the next week, bankrupted the next month, expelled from social circles the next year, or lost forever in the ash heap of history. But they believed in the righteousness of the cause. They knew liberty, as messy and inconvenient as it might sometimes be, was worth it for themselves and their posterity.

Let us not forget that it wasn’t just those 56 signers who birthed our nation 233 years ago. Tens of thousands fought against the crown and for liberty, giving life to our democratic republic.

Over the course of the revolutionary war, the fields of America were watered by the blood of men young and old who believed dying for the chance of liberty was better than living under the yoke of tyranny. Even as so many of their names are lost to history, their legacy is this brilliant city upon a hill, securing the blessings of liberty.

That’s what they were willing to do the day after the Fourth of July in 1776.

In this year, once the parades conclude, BBQs end, and fireworks explode, what will we do for the cause of liberty on the Fifth of July? That’s the day that counts, and each day after. While it’s good to celebrate our national independence, we must daily take action to preserve our liberty.

The cause of liberty – in our cities, counties, schools, state and nation – needs us more than ever. And it is still worth it.

President Obama told us he wanted to redistribute more income, and he is following through on that plan, says the Tax Foundation. In 2012, the first year that all of President Obama’s major taxing and spending initiatives would be in place (assuming Congress passes the programs), the top 1 percent of income earners will see an additional $64,000 per family redistributed to other families. For these families, the total income redistribution would rise from $368,000 to $432,000. That is the net redistribution, which the Tax Foundation calculates by considering the distribution of tax burdens and the distribution of spending. In other words, the amount of tax paid by these families would exceed the cost of the government services they receive by $432,000 in 2012. Earners in the 99th to 95th percentiles would also see a modest increase in redistribution away from them. The Tax Foundation calculates that the total redistribution for earners in the top 5 percent would be about 16 percent of their income in 2012. That figure, again, is not the tax burden for those families, but rather the amount of taxes that exceeds the cost of the government services they use. All other earners see either no change in redistribution or an increase in income redistributed to them.

A program of promising benefits to 60 percent of the people at the expense of only 5 percent of the people has obvious advantages in political marketability. But why stop there? The next candidate for President could up the ante by promising even greater benefits to 51 percent of the people at the expense of the top 25 percent of income earners. Aside from the economic costs of class war policies, voters eventually need to start considering the possibility that they too will end up in the government’s crosshairs. Remember, when the income tax was first established in the United States in 1913, the top rate was only 7 percent and it applied to only the top one-half of 1 percent of income earners.

According to Sergei Kovalev, World War II started “because of Poland’s refusal to meet Germany’s requests.” Kovalev writes: “The German demands were very modest. You could hardly call them unfounded.” Hitler, in Kovalev’s view, didn’t really want Lebensraum, but merely transport links across the Polish corridor to East Prussia and to the free city of Gdansk.

The views of a crank? Actually Kovalev is a colonel and a researcher in the Russian Ministry of Defense. Earlier this month, the ministry posted Kovalev’s lengthy essay laying out his views in a section of its Web site with the heading: “History: Lies and Falsifications.” The heading, it seems, was intended to identify Western historians and the press as the liars, not Kovalev himself. The Russian Ministry of Defense has since removed the paper from its Web site and disavowed it. Even so, the posting raises questions about how far the Russian government will go in attempting to control the writing of Russian history. Last month, Russian President Dmitry Medvedev created a commission to identify foreign “revisionists” who disparage the country’s prestige.

“Revisionism” is a relative term, of course. Kovalev’s article also argues that the British bear responsibility for the war since they gave Poland assurances of assistance in the event of an attack. The Molotov-Ribbentrop Pact? Just a variation of Neville Chamberlain’s appeasement, says Kovalev. Russia was trying to buy time to prepare for the eventual German invasion. So according to Kovalev, the war was both avoidable by Poland and also an inevitability for which the Soviet Union needed to prepare by invading Poland.

Proposed legislation backed by Medvedev would make it a crime, punishable by up to five years in prison, for anyone—foreigner or Russian—to claim that the Soviet Union occupied Poland or the Baltic States. Meanwhile, as the Russian writer Ivan Sukhov points out, the German Administration for the Defense of the Constitution would likely see Kovalev’s article as a defense of Hitler and therefore a violation of German law.

Historian Alan Charles Kors sums up what’s going on here: “Orwell had it right: ‘Who controls the past controls the future. Who controls the present controls the past.’ The Kremlin controls the Russian present.” This is the Kremlin with whom President Obama will be confabbing on July 7.

There may be good reasons to reform health care, but is the fact that health care costs rise two to three times faster than inflation one of those reasons? Says economist George Newman:

That’s like comparing the price of hamburger 30 years ago with the price of filet mignon today and calling the difference inflation. Or the price of a 19-inch, black-and-white TV 30 years ago with the price of a 50-inch HDTV today. The improvements in medical care are even more dramatic, leading to longer life, less pain, fewer exploratory surgeries and miracle drugs. Of course the research, the equipment and the training that produce these improvements don’t come cheap.